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Firms give AG money as he rewrites rules

Colorado Attorney General John Suthers has accepted thousands of dollars in campaign contributions for his re-election bid from numerous payday lending companies at the same time his office is considering new regulations of the industry.

Those new rules, which have not been finalized, are required under a law that went into effect Wednesday. The law is designed to clamp down on exorbitantly high interests rates that payday loan companies were allowed to charge, sometimes as high as 500 percent a year.

Suthers’ office is drafting new enforcement regulations of the industry, while his re-election campaign between June 28 and July 7 took in $10,350 from 11 payday lending companies, about half of which are based out of state.

While some of the companies contributed to numerous Democratic and Republican candidates over the past eight years, only one donated to Suthers in the past, and then only $500 when he ran for attorney general four years ago.

“This just doesn’t pass the smell test,” said Rep. Mark Ferrandino, D-Denver, who introduced the new payday lending law, which narrowly won approval in the House and Senate earlier this year. “The fact that they only gave money when he was doing these final rules, that more than ever really raises flags. There’s something fishy going on.”

Suthers acknowledged he accepted the money but said that doesn’t mean they’ve bought any favors from him. While Suthers said he doesn’t agree with the new law, he said his office will approve regulations that match what the law demands.

“My view has been that any law-abiding citizen, any law-abiding businessperson can contribute to my campaign, and the clear understanding is: I hope they’re not expecting anything,” he said. “I’ll bet you that payday lending owners contributed comparable amounts in 2006 that they are contributing now.

“What did they get for it? They got probably the most aggressive consumer-credit regulations in the country,” he said. “The regulations that recently came out, there’s a serious question whether this industry can survive. The legislation that was drafted is so poor.”

Several of the companies that donated to Suthers have donated money to candidates and lawmakers routinely over the years. But in 2006, they only gave about $3,200 to 11 candidates, including Suthers. In 2008, however, they gave more, about $14,000 to 20 candidates, according to campaign filings with the Colorado Secretary of State’s Office.

Twenty-nine members of the Legislature who are still in office, including Grand Junction Republicans Rep. Steve King and Sen. Josh Penry, have received money from them. All but seven of those lawmakers, all Democrats, voted against the new payday law during the 2010 session.

A hearing on the final rules is set for Aug. 31, and while some of the rules appear to be on par with the strictness of the new law, others aren’t, according to a capital legislative staff member who worked on the legislation.

The legislative staff member, who spoke on the condition of anonymity, said Suthers is correct when he says parts of the new law are poorly drafted, particularly as they deal with how payday lenders can charge fees. But the loopholes that exist in the law are widened under the rules Suthers’ office is proposing.

The legislative staff member said the new law was intended to cap annual interest rates to 45 percent, but some of the rules would allow payday lenders to charge more in fees under certain circumstances that could allow them to double that rate.

Ferrandino said legislators are barred from accepting campaign donations from groups that lobby them when the Legislature is in session. Suthers, he said, should do the same when his office is considering rules that impact campaign contributors.

Ferrandino and Boulder County District Attorney Stan Garnett, Suthers’ rival in his re-election bid, said that while it isn’t illegal for the attorney general to accept such donations, the timing of them is questionable.

“In a position like attorney general, perception is an important issue,” Garnett said. “Is there a connection between him accepting contributions from these political action committees related to payday loans and the decisions he’s making in the rule-making process? That’s impossible to know. But when you’re dealing with decisions in the legal system, appearance is very important.”

Suthers, however, pointed to some of Garnett’s supporters, saying the amount of money he has received from trial lawyers shows his own bias.

Of the $193,000 Garnett has received, 60 percent, or $113,000 of it, came from attorneys. Suthers has accepted about $44,000 from other lawyers, which is less than 15 percent of his $300,000 war chest.

“You’re going to see a lot of press releases from Stan saying, ‘Gee, the bankers are supporting Suthers. Gee, the credit unions are supporting Suthers.’ And why is that? Because they get a fair shake,” Suthers said. “I’ve got thousands of $25 and $50 contributors. He has got the trial bar, the plaintiff trial lawyers. The Democratic model is to go to the trial lawyers.”